Is This Rally For Real?
Right now, the Red-Hot Canadian Small-Cap portfolio on my screen is as green as a Christmas tree. The Red-Hot Australian Small-Cap portfolio was a little more mixed overnight, but Australia has had three strong days -- led higher by uranium. And heck, one of Australian miners in the portfolio jumped over 10% today. Go, Asia!
So is this rally for real? I mean, we've all had our fingers burned so often by now that we could open up our own burn ward at the hospital. We'd like it to be real ... but it's so hard to trust.
Here is my list of top reasons why the rally might be for real...
#1 Market shrugs off bad news. In retrospect, we should have known the market was due for a serious correction a few months back because bullish news stopped moving the market higher. Now, we're seeing the opposite. We received news today that crude oil and natural gas inventories are way up this week, but crude oil prices are actually up on the news. That tells me we are very close to a bottom. There's no one left to sell.
#2 Market applauds good news. Now, it may help that China's imports climbed to 13.46 million tons or about 3.29 million barrels a day, in September, the Beijing-based Customs General Administration of China said today. That's a rise of 24% in September compared to a month earlier. The nation bought 10.85 million tons of oil a year earlier. Imports rose 16% to109.25 million tons in the first nine months of 2006, the government said. Read all about it here: http://www.chron.com/disp/story.mpl/ap/fn/4254086.html
#3 It's not just oil. Look at the action in precious metals. Zoom-zoom! What's moving that market? Jewelers from India and Turkey are buying so much gold that suppliers can't keep up -- theyr'e running 24 hours a day. This is shaping up to be a VERY bullish wedding season in India, the world's #1 buyer of gold jewelry.
If you want to nurse your fingers a while longer before getting into this rally, I don't blame you. RCS subs, you have one Canadian-based Mexican miner that's up 7.5% on the day as I write this, and I think the others are likely to follow. Let's see where this wave takes us.
So is this rally for real? I mean, we've all had our fingers burned so often by now that we could open up our own burn ward at the hospital. We'd like it to be real ... but it's so hard to trust.
Here is my list of top reasons why the rally might be for real...
#1 Market shrugs off bad news. In retrospect, we should have known the market was due for a serious correction a few months back because bullish news stopped moving the market higher. Now, we're seeing the opposite. We received news today that crude oil and natural gas inventories are way up this week, but crude oil prices are actually up on the news. That tells me we are very close to a bottom. There's no one left to sell.
#2 Market applauds good news. Now, it may help that China's imports climbed to 13.46 million tons or about 3.29 million barrels a day, in September, the Beijing-based Customs General Administration of China said today. That's a rise of 24% in September compared to a month earlier. The nation bought 10.85 million tons of oil a year earlier. Imports rose 16% to109.25 million tons in the first nine months of 2006, the government said. Read all about it here: http://www.chron.com/disp/story.mpl/ap/fn/4254086.html
#3 It's not just oil. Look at the action in precious metals. Zoom-zoom! What's moving that market? Jewelers from India and Turkey are buying so much gold that suppliers can't keep up -- theyr'e running 24 hours a day. This is shaping up to be a VERY bullish wedding season in India, the world's #1 buyer of gold jewelry.
If you want to nurse your fingers a while longer before getting into this rally, I don't blame you. RCS subs, you have one Canadian-based Mexican miner that's up 7.5% on the day as I write this, and I think the others are likely to follow. Let's see where this wave takes us.
Check out my new gold and energy blog at MoneyAndMarkets.com
posted by Sean Brodrick @ 1:36 PM
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